Over the years, futures trading and options trading has gained a foothold among Indian traders. Derivatives trading is a popular choice now, and you can trade with the best strategies to make good gains. Although you cannot bank on tips and strategies alone, handy hints can help you to perform well in the F & O segment. It is a well known fact that, when gains are made with futures and options trading, they are substantial. However, first you must have knowledge, and then make use of tips.
Beginners may find it challenging to grasp the concepts of futures and options at first, but once they do, it's simple enough. Firstly, there are no processes involved, like having to open a demat account, as you would likely have to with trading in stocks. So, what are futures and options? They are both contracts and differ according to the terms that are stipulated in each of them.
In futures trading, a futures contract is an agreement that an investor enters into, in order to purchase or sell an underlying asset (commodities, shares, gold, etc.) by a predetermined date at a specific price. The value of the underlying asset determines the value of the contract - that means the contract derives value from the underlying asset, hence this is called derivatives trading too. The investor, while having a right to buy or sell assets, also has an obligation to do so. Therefore, regardless of price fluctuations, investors must purchase or sell assets on the date of expiry of the contract in question. If you think that this is too binding and wish to go in for an upcoming IPO instead, think again. With futures trading, you only have to spend a percentage of the value of your trade, and not a heavy lump sum amount.
In futures and options trading, many investors prefer to trade in options, as those are more flexible contracts. In futures and options trading, options contracts are agreements to buy/sell assets too. With options, the prices of assets are fixed beforehand, and investors must buy or sell by predetermined dates, but there is no obligation to do so. Investors may change their minds, or sell at an earlier date (than the date of contract expiry) if prices rise, or buy earlier, if prices fall.
To make your trades successful in futures and options, here are some tips you should consider while indulging in futures trading or options trading:
With clever tips and trading strategies, futures and options may not be a nemesis afterall. Trading directly in markets may be easy after you open a demat account, or subscribing to an upcoming IPO, but futures and options have proved beneficial to a host of traders.
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